Exit Success Company Sales Process
There are Two Phases in our Exit Success Company Sales Process.
Some of the steps occur simultaneously so it can be a relatively quick process if both buyer and seller are motivated to perform all the steps in a timely fashion.
We are usually in a position to introduce qualified buyer to the seller within 2 weeks from the start of the process.
The Exit Success process can run for up to 9 months across Phase One & Phase Two.
If at any point during the process the buyer interest levels or general activity drop, the project can be paused or terminated.
Some of the steps occur simultaneously so it can be a relatively quick process if both buyer and seller are motivated to perform all the steps in a timely fashion.
We are usually in a position to introduce qualified buyer to the seller within 2 weeks from the start of the process.
The Exit Success process can run for up to 9 months across Phase One & Phase Two.
If at any point during the process the buyer interest levels or general activity drop, the project can be paused or terminated.
- Fully understand the client's business, expectations and company value.
- Perform extensive research and distil a list of qualified buyers.
- Setup a secure Data Room from which to run the project.
- Prepare the marketing documentation. (Confidential Teaser & Business Profile)
- Contact the buyers and get signed NDA's from interested parties.
- Post NDA, send full details of the opportunity to the buyer.
- Hold buyer/seller meetings, face to face or online.
- Invite the buyers to make a non-binding offer.
DEFINING POTENTIAL OPTIONS AND EXIT STRATEGIES
When considering an exit from a company, there are potentially a wide variety of transaction options. These options must be understood and evaluated by the shareholders and/or the board. Understanding these options and the decisions they lead are the most strategic decisions a company will ever make when it comes to realising value. Full or Partial Trade, Strategic M&A Sale, Management Buy-Out, Management Buy-In etc – essentially it boils down to various methods by which a company divests itself or part of itself or to whom it sells.
Acquirers break down at a high level into two categories: financial acquirers and strategic acquirers. This also includes defining: exit strategy alternatives; thinking through the most appropriate types of acquirers; timing of sale; tax consequences and owner’s desire for future involvement with the company (or lack thereof).
Acquirers break down at a high level into two categories: financial acquirers and strategic acquirers. This also includes defining: exit strategy alternatives; thinking through the most appropriate types of acquirers; timing of sale; tax consequences and owner’s desire for future involvement with the company (or lack thereof).
INFORMATION GATHERING, DATA COLLECTION, AND PRESENTATION
Spending the time to properly aggregate, interpret, and present a company’s financial and company history and future projections is a crucial element of the sale process. Taking the time properly present a company’s earnings power can have a big impact on how the acquirers view the opportunity.
Of course, the shareholders can go too far here and lose credibility, which is also a big mistake in the other direction. However, making sure that the appropriate financial adjustments are made is an important step and takes time and analysis.
Of course, the shareholders can go too far here and lose credibility, which is also a big mistake in the other direction. However, making sure that the appropriate financial adjustments are made is an important step and takes time and analysis.
MARKETING MATERIALS PREPARATION
When potential acquirers evaluate a company, they expect the facts to be properly organised and documented. Disorganised or poorly collated material on a company delays the process, looks sloppy, and therefore hurts the shareholders tremendously. Well-packaged and presented company summaries increases an acquirer’s confidence and comfort level and increase the likelihood of a successful exit.
Shareholders spend years establishing name recognition, market niche, vendor relationships, operation & production systems, management, personnel, distribution channels, customer loyalty and numerous other intangibles. This is a story that needs to be properly told to educate potential acquirers.
Shareholders spend years establishing name recognition, market niche, vendor relationships, operation & production systems, management, personnel, distribution channels, customer loyalty and numerous other intangibles. This is a story that needs to be properly told to educate potential acquirers.
ACQUIRER RESEARCH AND ACQUIRER OUTREACH STRATEGY
This research process should be exhaustive, not rushed. A review of competitors, customers, strategic acquirers, private equity firms with relevant expertise, and other sources of highly suitable capital and partnership on an international basis. This is one of the most time-intensive elements of the process, but it often determines the overall success of the exit process. If you don’t approach the best acquirers, how can you get the best outcome?
QUALIFICATION OF POTENTIAL ACQUIRERS
Many potential acquirers that express interest in a company will not be qualified to purchase the company. It’s about knowing the right questions and having enough market intelligence and expertise to regarding these acquirers and pre-qualify the right potential acquirers.
NEGOTIATION PROCESS
In general, shareholders are more likely to achieve a stronger outcome when negotiating with multiple qualified acquirers, rather than just one or a handful. This can of course be taken too far as well, where every acquirer feels like they are part of a huge auction process, in which case they walk away for fear of over-paying. Competition in the process does drive up transaction value and quicken the pace and accountability of acquirers, but it should be handled carefully, respectfully and professionally.
TRANSACTION STRUCTURE
The exiting of a company has many financial and professional considerations for the shareholders. The purchase price is only one component of the overall result. Other decisions and considerations include: share sale versus asset sale; earn out; terms and interest rate on financing; liabilities assumed by the acquirer; employment contracts; non-compete agreements etc.
OFFERS AND SALE & PURCHASE AGREEMENTS AND CLOSING
Typically, acquirers express interest in a company at three stages through three documents: The Offer, Heads of Terms Agreement and Sale & Purchase Agreement. The Offer is non-binding and provides the proposed terms, valuation and structure for a transaction.
The Heads of Terms Agreement is a more serious signal of interest by the acquirer; once they are jointly executed, the shareholders are typically under exclusivity with that acquirer, such that they are not able to meet with other acquirers during a stated period. Meanwhile, that acquirer is beginning to conduct Due Diligence (DD) on the company with the intent of acquiring it. During the exclusivity period, the acquirer must move quickly to determine if they want to proceed.
If so, The Sale & Purchase Agreement must be drafted to define all the details of the transaction: legal, financial, representations, warranties, etc. The Sale & Purchase Agreement is the definitive document outlining the terms of the sale.
The transition period typically involves a period of cooperation during which time the shareholders will assist the acquirer in transition. There are instances in which the shareholder is specifically not interested in doing this, however a lack of willingness to ease the transition typically lead to a lower valuation and in plenty of cases can derail the deal process entirely.
The Heads of Terms Agreement is a more serious signal of interest by the acquirer; once they are jointly executed, the shareholders are typically under exclusivity with that acquirer, such that they are not able to meet with other acquirers during a stated period. Meanwhile, that acquirer is beginning to conduct Due Diligence (DD) on the company with the intent of acquiring it. During the exclusivity period, the acquirer must move quickly to determine if they want to proceed.
If so, The Sale & Purchase Agreement must be drafted to define all the details of the transaction: legal, financial, representations, warranties, etc. The Sale & Purchase Agreement is the definitive document outlining the terms of the sale.
The transition period typically involves a period of cooperation during which time the shareholders will assist the acquirer in transition. There are instances in which the shareholder is specifically not interested in doing this, however a lack of willingness to ease the transition typically lead to a lower valuation and in plenty of cases can derail the deal process entirely.
- Hold confidential buyer/seller meetings - accompanied by one of our team.
- Structuring a two stage offer deadline process to cultivate a competitive bidding environment.
- Lead on all offer negotiations with buyers.
- Oversee due diligence.
- Full project management from 'Heads of Terms' to successful conclusion of the sale.
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A propriety database of 4,500 Private Equity groups and in excess of 400,000 strategic companies, quickly identifies the greatest number of buyers.
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Buyers Interest In
Weeks
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Avg Time to Sell
Months
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Avg NDA's Signed
Per Project
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Experience
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Timelines
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Research
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Confidentially
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